The Gold Bar Deposit is a mineral resource located along the Cortez trend in Nevada, US. Over the past six years, US mining company McEwen Mining Inc. (NYSE:MUX) has developed the deposit from the exploratory stage into a project poised for production. On the back of a feasibility study, which McEwen completed at the end of 2015, estimates suggest that the mine should produce 65,000 oz. of gold annually at a cash cost of $728/oz. All-in sustaining costs at the mine are estimated to be $995/oz. of gold.
Measured and indicated resource estimates suggest there are 2.1 million tons grading 0.95 g/t Au or 611,000 oz. of gold and the inferred resource at the deposit is 4.6 million tons at 0.82 g/t or 111,000 contained oz.
With around $60 million initial investment, the company is set to ramp up towards the above noted 65,000 oz. of gold production over the coming 24 months and expects a payback period of three years at $1,150/oz. gold (which serves as the base case of the study) or, if gold runs higher, just two years at $1,300/oz.
Permitting is underway right now and the company expects to start building out the site during late 2017, with production ramping up as the build progresses throughout 2018 and, beyond, into 2019.
It's a strong resource for a company of McEwen's size (the company trades for a current market capitalization of $830 million) and adds to an already strong portfolio of producing mines for the company.
Back in January 2016, McEwen announced that it had expanded its claim count at Gold Bar with the acquisition of a property called Gold Bar South. The expansion added 190 mining claims to the Gold Bar count as a whole and drilling subsequent to the acquisition has demonstrated very similar geological formation and, as implied by the similarity in formation, the potential for a high-grade resource to complement the estimates initially put together as part of the above-referenced feasibility study.
For an investor looking to pick up an exposure to the Gold Bar deposit, McEwen might make for a nice allocation ahead of the company pulling its first oz. out of the ground at the site.
It's not the only player in the region, however.
There's another gold miner, US Gold Corp (NASDAQ:USAU), which just made a move that sees it lay claim to a significant part of the Gold Bar district. While McEwen expanded its claim count to the south, US Gold Corp. has snatched up a number of claims to the north of the primary Gold Bar deposit, with its acquisition of what's called (unsurprisingly) Gold Bar North.
The company announced this acquisition on July 5, 2017, and is pitching it as an extension of its current lead mineralization district, a project called Keystone.
Interestingly, when it acquired Gold Bar South, McEwen justified the purchase in a very similar way to that in which US Gold Corp. explained its Gold Bar North claims acquisition. Here's a quote pulled from the McEwen PR announcing the transaction:
"The objective is to develop the property into a satellite resource that can contribute to the production from Gold Bar."
And a similar quote from Dave Mathewson, Head of Exploration at US Gold Corp., in the PR announcing the latter's acquisition of Gold Bar North:
"The property is very synergistic for our flagship Keystone district-scale project and provides an additional exploration upside for a potential discovery."
So why is this worth highlighting?
Well, with Gold Bar North, US Gold Corp. is at a similar stage of development as was McEwen with the central Gold Bar deposit back at the start of the decade. That is, the project has been shown to exhibit very similar geological features to that of the surrounding, high-grade producing properties, with the implication being that it could be developed into one such producing property itself.
For a gold mining investor looking to turn back the clock, therefore, and pick up an exposure to Gold Bar at a price reflective of its pre-development status, US Gold Corp. might be a smart allocation. There's an inherent risk associated with an allocation to junior gold explorers, of course, primarily rooted in the fact that the company still has to prove that the resource in question is economically mineable. McEwen investors were willing to take on this risk ahead of the company proving said feasibility at Gold Bar, however, and there's a good chance a large portion of the gold community will be willing to do the same with US Gold Corp., especially given that McEwen's efforts in the region have served to reduce the risk somewhat.
For those not familiar with US Gold Corp., the company is a relatively young mining company seeking to bring the above-noted Keystone resource to production in Nevada. The resource is strategically located along the state's Cortez trend – one of the most reliably mineralized trends in the world and home to some of the US's biggest deposits, most of which are currently under processing by mining behemoths like Newmont Mining Corporation (NYSE:NEM) and Barrick Gold Corporation (NYSE:ABX).
The company's exploration lead is Mathewson, who is quoted above and who is one of the most well-known and well-respected geologists in the Nevada gold space. Over the last twenty years, he has worked with a number of incumbents in the space and the state, most notably having led the teams that made three of Newmont's biggest Nevada discoveries – Tess, Northwest Rain and Saddle – each of which is now producing multi million oz. gold annually. Subsequent to his role at Newmont, Mathewson founded Gold Standard Ventures Corp (NYSE:GSV) and built the company to its current valuation just shy of $1 billion. US Gold Corp. is the prolific geologist's next attempt at doing just that.
Bottom line here is that the Gold Bar district has been subject to various exploratory efforts over the past two decades and, with the McEwen progress, is finally about to move to the production phase. McEwen makes for a potentially rewarding exposure to the resource if the company can execute against its build-out strategy across the coming twelve to eighteen months, while US Gold Corp. makes for a slightly riskier, but potentially far more rewarding, exposure to the resource ahead of its establishing of estimates at Keystone and Gold Bar North.